Wednesday, August 6, 2008

Borrow from standard chartered?

Just received a call from standard chartered to take up a 25k loan @ 3.49% interest per year, repayable via installments for 2 years. This sounds like a great deal, considering buying high yield stocks will definitely allow one to earn at least 6% per annum.

As I enquired more, the telesales operator told me that there is a 1.8% insurance charge, which is compulsory. Meaning I will only get $9820 for a $10,000 loan. Together with the 3.49% interest, I will need to pay almost 6% annualized interest.

I felt cheated by the call. Wasted a good 10 minutes listening to the sales talk.

I wanted to make a counter offer. Why not I lend you 10,000 for 2 years and you pay me 5.5% interest in monthly installments?

Standard chartered needs to try harder to make me take loans from them. It is an irony that they only want to lend money to people who do not need it.

2 comments:

jeflin said...

Hmm, you are right to refuse this deal.

Assuming you made 8% per annum which is reasonable in a soft market, they pocket 6% while you earn 2%.

However, if you want to accumulate good standing among the banks and create larger credit lines later on, you can consider this loan.


http://jeflin.net

Sgbluechip said...

Thanks for the info!